Why do so few succeed?

[new_trader]

“The chief virtue that language can have is clearness, and nothing distracts from it so much as the use of unfamiliar words”

-Hippocrates

“Words are like leaves, and where they are most abound, much fruit of sense beneath is rarely found”

-Alexander Pope


“The source of bad writing is the desire to be more than a person of sense-to be thought a genius. If people would only say what they have to say in plain terms, how much more eloquent they would be.”

-Samuel Taylor Coleridge

 

[barjon]

Who would be a moderator eh ....nightmare...

indeed

 

[dbphoenix]

Why not just close it, jon? We'll all be doing this in some other thread eventually anyway.

 

[barjon]

Why not just close it, jon? We'll all be doing this in some other thread eventually anyway.[/QUOTE

Yes, it's heading that way, db. I did try to save it since the subject (when it got remembered) seemed to attract a lot of interest. But if it can't get back on track then so be it.

good trading

jon

 

[contrakt]

Why

because they keep making uncontrolled relative bigg losses

 

[tunnel1x1]

On Topic

In an effort to move this thread back on topic, in reply to Milano as to why so few succeed, I believe that the answer lies in the fact that it is because we are human, and it is human nature not to succeed in this type of endeavor. Milano, I would strongly recommend that you obtain Mark Douglas' book, Trading in the Zone. He makes the point, and I think he is correct, that our brains are wired in a fashion that will ensure we lose money consistently. The difference between successful traders and the majority of others is that successful traders think differently.

At the risk of inviting flaming arrows from all sides, much of what I have gathered from Socrates is in the same vein as Douglas, which is why I do not discount what Soc. has said. Douglas has exercises in his book to help you begin the process of thinking differently. Milano, it will be a very firm foundation for you to begin if you have not yet read it. You will begin to understand how it is that the very essence of your human nature works to your demise in the trading arena. Hope this helps.

Tunnel

 

[jezza888]

A lack of discipline IMO

 

[the blades]

Dear Barjon,


You have succeeded in undoing all my work on this thread.


Kind Regards As Usual.

LMFHO - that's the funniest poster title wrapped up for another year.

UTB

 

[dbphoenix]

In an effort to move this thread back on topic, in reply to Milano as to why so few succeed, I believe that the answer lies in the fact that it is because we are human, and it is human nature not to succeed in this type of endeavor. Milano, I would strongly recommend that you obtain Mark Douglas' book, Trading in the Zone. He makes the point, and I think he is correct, that our brains are wired in a fashion that will ensure we lose money consistently. The difference between successful traders and the majority of others is that successful traders think differently.

At the risk of inviting flaming arrows from all sides, much of what I have gathered from Socrates is in the same vein as Douglas, which is why I do not discount what Soc. has said. Douglas has exercises in his book to help you begin the process of thinking differently. Milano, it will be a very firm foundation for you to begin if you have not yet read it. You will begin to understand how it is that the very essence of your human nature works to your demise in the trading arena. Hope this helps.

Tunnel

No flaming arrows, Tunnel, but anyone who is successful at anything thinks differently from those who are unsuccessful.

As for Bertie and Douglas, Bertie disagrees with nearly the entire process that Douglas recommends.

And though there's a great deal of overlap between the two, I suggest that anyone who is interested in Douglas also read The Disciplined Trader.

 

[tunnel1x1]

Good points DB. I recommended Trading in the Zone first because I thought it was a little clearer and easier to get through than the Disciplined Trader. I read the latter first and enjoyed it much. However, I was able to understand his concepts a little better in the Zone. But they are both quite good.

 

[dbphoenix]

Good points DB. I recommended Trading in the Zone first because I thought it was a little clearer and easier to get through than the Disciplined Trader. I read the latter first and enjoyed it much. However, I was able to understand his concepts a little better in the Zone. But they are both quite good.

Understood. What to me was important about TDT was the discussion on belief systems, largely because without addressing that, the trader would likely have difficulty not only going through the process detailed in TITZ, but also relying on the results. And being able to rely on the results is what makes it all work. And if relying on the results means relying on faith, then the trader may be in trouble, which is why the discussion of belief systems is pertinent.

 

[tunnel1x1]

Understood. What to me was important about TDT was the discussion on belief systems, largely because without addressing that, the trader would likely have difficulty not only going through the process detailed in TITZ, but also relying on the results. And being able to rely on the results is what makes it all work. And if relying on the results means relying on faith, then the trader may be in trouble, which is why the discussion of belief systems is pertinent.

Yep. Very true. And, as a corollary, Douglas helped me understand and fully comprehend (although some of the old creature still creeps in) that there is no holy grail. The secret to trading is that there is no secret. I spent years chasing rabbits down various holes, as do most I imagine. I spent a couple years alone chasing the WD Gann grail and still use the moniker "tunnel" as a reminder of that futile search. Douglas makes the point that we will never be able to learn all there is about the market from either a technical or fundamental perspective. It's not about acquiring more technical expertise. It's about, as you say, changing our belief system. That's the area I am trying to focus on now. One of the useful beliefs I have embraced, contrary to where I used to be, is that I cannot predict the markets and never will be able to. However, it is not necessary to predict in order to be successful.

 

[TheBramble]

Milano, I would strongly recommend that you obtain Mark Douglas' book, Trading in the Zone. He makes the point, and I think he is correct, that our brains are wired in a fashion that will ensure we lose money consistently.

I thought what he said was that if we take no specific action to re-wire or be objectively aware of our emotional responses to market (or any) situations, that's what would be the default response and result. Not that it was inevitable in all cases.

The difference between successful traders and the majority of others is that successful traders think differently.

Before anybody dismisses that as a 'given', it pretty much encapsulates the whole caboodle. The problem is that most traders think they think differently to 'the others'. The trick, it seems to me, is to have a higher probability take on what 'the others' are most likely thinking than they really do themselves...

At the risk of inviting flaming arrows from all sides, much of what I have gathered from Socrates is in the same vein as Douglas, which is why I do not discount what Soc. has said.

Tunnel, very astute sidestep. But Socs is here to put on his own show (showcase?), and is not in support of anyone else. Douglas tells us as much as he can so that we can (choose to) be better traders. I don't believe Socrates' intent is the same.

Good post, but don't get drawn into the pitiful morass. That's my job.

 

[dbphoenix]

One of the useful beliefs I have embraced, contrary to where I used to be, is that I cannot predict the markets and never will be able to. However, it is not necessary to predict in order to be successful.

Exactly. The problem that so many people have with this, tho, is that they can't distinguish between prediction and assessing probabilities. What D says is that the outcome of any given trade is unknowable. HOWEVER, one can still assign probabilities through the defining and testing process in order to make a determination as to whether or not to enter that particular trade.

But since you're into all this, I'm preaching to the choir. I'm glad the book's been useful to you.

 

[tunnel1x1]

I thought what he said was that if we take no specific action to re-wire or be objectively aware of our emotional responses to market (or any) situations, that's what would be the default response and result. Not that it was inevitable in all cases.

Yes, I think we are saying the same thing. We come into this trading environment, according to Douglas, with the "wiring mechanism" that will ensure losses. In order to become successful, we have to rewire our brains so that we no longer have the same response as before to the stimuli of the markets. If we are successful in the rewiring process, then we become successful traders. So, I think he says we need to be more than objectively aware of our emotional responses. We have to move beyond that so that the market stimuli does not generate the same emotional responses. In other words, we are not so much controlling our emotions as we are not having the emotions generated in the first place. So, as one small example, we no longer think of ourselves as "losers" or as having losing trades. Rather, as Tudor Jones says, we have performing trades, and non-performing trades. When we have a non-performing trade, we do not have any emotional reaction to it. We simply close it out and move on to the next trade.

Before anybody dismisses that as a 'given', it pretty much encapsulates the whole caboodle. The problem is that most traders think they think differently to 'the others'. The trick, it seems to me, is to have a higher probability take on what 'the others' are most likely thinking than they really do themselves...

Yes, good point. Am I really thinking differently or do I just think I think differently. Seems like, as I progress in my development, I am able to see that I am beginning to think differently.

Tunnel, very astute sidestep. But Socs is here to put on his own show (showcase?), and is not in support of anyone else. Douglas tells us as much as he can so that we can (choose to) be better traders. I don't believe Socrates' intent is the same.

Good post, but don't get drawn into the pitiful morass. That's my job.

Yes, we want to stay out of the morass and continue on the high road.

 

[tunnel1x1]

Bramble - My reply to yours is contained within your quoted section of my last post, if that makes sense. As you can see, I'm new to the posting boards so still a little unskilled in how to work this thing.

 

[new_trader]

Exactly. The problem that so many people have with this, tho, is that they can't distinguish between prediction and assessing probabilities. What D says is that the outcome of any given trade is unknowable. HOWEVER, one can still assign probabilities through the defining and testing process in order to make a determination as to whether or not to enter that particular trade.

But since you're into all this, I'm preaching to the choir. I'm glad the book's been useful to you.

Maybe I am missing something here. The idea of developing a trading system is to remove the human element from the decision making process, isn't it? That way we avoid trading with emotions.

 

[tunnel1x1]

Maybe I am missing something here. The idea of developing a trading system is to remove the human element from the decision making process, isn't it? That way we avoid trading with emotions.

That's one aspect of it. Following a system will help one develop the right mindset to become a successful trader. However, until that correct mindset is developed, a person will not be able to follow the system developed because the brain will overide the system at various points. So, just having a system to follow will not work in and of itself. It's a positive step in the process, though, according to Douglas. He advocates following a simple mechanical system for 20+ trades, without deviation, as an aid to developing the rewiring of the brain needed to be successful.

 

[new_trader]

Confused

That's one aspect of it. Following a system will help one develop the right mindset to become a successful trader. However, until that correct mindset is developed, a person will not be able to follow the system developed because the brain will overide the system at various points. So, just having a system to follow will not work in and of itself. It's a positive step in the process, though, according to Douglas. He advocates following a simple mechanical system for 20+ trades, without deviation, as an aid to developing the rewiring of the brain needed to be successful.

I am a little more confused now, perhaps it needs further clarification. You (Douglas) imply the mindset is developed by following a simple mechanical system, but, until the mindset is developed, it will be incapable of following the system developed. It's a paradox. Also, why would one abandon a simple mechanical system that is profitable? I assume this because you mention the system is to be used as an aid to developing a successful mindset, like training wheels.

 

[dbphoenix]

I am a little more confused now, perhaps it needs further clarification. You (Douglas) imply the mindset is developed by following a simple mechanical system, but, until the mindset is developed, it will be incapable of following the system developed. It's a paradox. Also, why would one abandon a simple mechanical system that is profitable? I assume this because you mention the system is to be used as an aid to developing a successful mindset, like training wheels.

You're asking about the contents of two books, so whatever clarification can be provided in a message board post may not be adequate. If you're interested but want primarily a quickie review, read my posts in the "Trading Journals" thread below.

Essentially, the "system" is "mechanical" because you've defined your setup, tested it, determined the probabilities of its succeeding, know how long a string of uninterrupted losses you can expect, know how bad the worst loss is likely to be. You understand what loss is, have accepted the inevitability of it, and are no longer bothered by it because you have a consistently profitable system/strategy that you trust. You have therefore short-circuited hope, fear, greed, doubt, anxiety, frustration. They are no longer elements of your trading day. If they are, then you haven't tested your system/strategy as thoroughly as you thought you had.

Perhaps the simplest way of determining whether or not you're ready to trade after having created and tested your system is to ask yourself if you care whether the trade you just entered succeeds or fails. If you do, then you're not ready. If your heart rate and respiration increase, then you're definitely not ready. You've intellectualized the process but you haven't internalized it. Therefore, you're relinquishing control.

Again, this is next to impossible to summarize in a message board post. Read the Journals thread below and, if they pique your interest, Douglas' two books. Then you'll be working with something more substantial than this.